BELL POTTER TO PAY $358K PENALTY FOR MANIPULATING THE MARKET
Written on the 16 November 2017 by David Simmons
STOCKBROKING firm Bell Potter has paid a penalty of $358,000 after the corporate watchdog found that it manipulated the market.
ASIC's Markets Disciplinary Panel (MDP) found Bell Potter made bids in July 2015 for shares in DirectMoney Limited (ASX: DM1) with the intention of supporting the price of the shares in the company during the first two weeks of its backdoor listing on the ASX.
Bell Potter was the Lead Manager and Underwriter to the capital raising of the now ASX-listed company.
Following DirectMoney's first day of trading, its shares performed below expectations and Bell Potter's management invested $200,000 in DirectMoney.
The investment was to be implemented by an on-market acquisition of shares in DirectMoney in a way so as to not acquire more than 20 per cent of the total volume traded in DirectMoney on any one given day.
MDP found the trader asked to invest the $200,000 was put in a position of conflict because the trader was under an instruction from senior management to fill the buy-order subject to the daily volume limit. He was being influenced by the Equity Capital Markets area and Hong Kong Division of Bell Potter to support the share price of DirectMoney.
The MDP was satisfied that while the investment in DirectMoney may have been a genuine commercial decision, the manner of implementation of the decision, acting under the instructions or influence of the Equity Capital Markets Division and the Hong Kong Division, involved market manipulation.
In May 2016, Bell Potter notified ASIC of the suspicious trading following their identification of additional recordings of telephone conversations of the Hong Kong Division.
The MDP considered the notification from Bell Potter was too late, and that the stockbroker would have formed reasonable suspicions earlier in the year.
Business News Australia
Author: David Simmons